DAKSHIN BARASAT SERVICE CO-OPERATIVE SOCIETY LTD.,DAKSHIN BARASAT vs. I.T.O,, WARD - 25(1),, KOLKATA

This appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (hereinafter referred to as “ld. CIT(A)”) dated 22.08.2024 passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

Brief facts of the case are that the assessee is a society registered under West Bengal Co-operative Society Act, 2006 and Rule 2011. The assessee filed its return of income for the Assessment Year 2018–19, declaring total income at ‘Nil’ after claiming deduction under Section 80P/Chapter VI-A of the Income-tax Act, 1961. The case was selected for Scrutiny Assessment for the limited purpose of verifying the deduction claimed under Chapter VI-A, including investments, advances and loans. Accordingly, statutory notices under Section 143(2) and Section 142(1) of the Act were issued, calling for details. The assessee furnished the required information along with supporting Dakshin Barasat Service Cooperative Society Ltd documents. After considering the written submissions and verifying the records, the Assessing Officer (AO) completed the assessment under Section 143(3) of the Act, accepting the returned income and holding that the declared total income is Nil. However, along with the assessment order, a demand notice under Section 156 of the Act was issued, raising a tax demand against the assessee.

Aggrieved by the order of the AO assessee preferred an appeal before the Ld. CIT (A) where the learned CIT(A) dismissed the appeal by observing that the AO, in Paragraph 1 of the assessment order, had clearly stated that the returned income of the assessee was accepted. Therefore, as per the Ld. CIT(A), since the assessment did not result in any variation of income and no demand was shown in the body of the order, there was no grievance for the assessee to maintain an appeal.

Dissatisfied with order of CIT(A), assessee is in appeal before this Tribunal. The Ld. AR submitted that the assessment order under Section 143(3) of the Act accepted the returned income at Nil, and hence no tax liability arose. However, the Ld. AO, despite accepting the return, issued a demand notice under Section 156 of the Act, which is contradictory, arbitrary and bad in law. He further stated that a demand under Section 156 of Act must necessarily be supported by a valid assessment order indicating the basis of computation, which is absent in the present case. Therefore, Ld. AR contended that the demand raised is unsustainable and liable to be quashed.

On the other hand, the Ld DR submitted that although the assessment order reflected acceptance of returned income, the computation form accompanying the notice under Section 156 of the Act resulted in a tax demand and therefore the action of the AO was justified.